Rep Says Elizabeth Holmes Conned Betsy DeVos' Family

Wealthy clan doubled Theranos investment to $100M
By Rob Quinn,  Newser Staff
Posted Oct 27, 2021 2:35 PM CDT
Rep: DeVos Was 'Misled' Before $100M Theranos Investment
In this Oct. 15, 2020 photo, then-Secretary of Education Betsy DeVos speaks at the Phoenix International Academy in Phoenix.   (AP Photo/Matt York, File)

(Newser) – Former Education Secretary Betsy DeVos and her billionaire family were among the many people misled by Theranos founder Elizabeth Holmes, a rep testified Tuesday. Lisa Peterson, who works on investments for the DeVos family, said she was asked to look into Theranos in 2014 after one of her bosses spoke to Holmes and said it was "one of the most interesting meetings" he could recall, NBC reports. Peterson said family members were led to believe the start-up's blood testing "was going to be a game changer for health care" and the family doubled an initial investment of $50 million to $100 million after meeting Holmes.

Peterson testified that Holmes claimed the company could run 200 to 300 tests from a single finger prick—but didn't disclose that it was using third-party systems for its testing, the Washington Post reports. She said Holmes shared financial projections predicting huge rises in revenue in 2014 and 2015, but the family was unaware Theranos had no revenue at all in 2012 or 2013. Holmes, who faces a dozen counts of wire fraud and conspiracy to commit wire fraud, is accused of misleading investors about the capabilities of the testing technology. Other major investors included Rupert Murdoch, Mexican billionaire Carlos Slim, and Walmart owners the Walton family.

The Verge notes that Holmes attorney Lance Wade "hammered" the theme of poor due diligence during cross-examination, noting that the DeVos family and Peterson failed to vet the investment by talking to Walgreens (which Theranos had a deal with), outside scientists, or regulatory experts. He showed Peterson charts from a report Theranos had provided and asked if she knew what kinds of tests were involved. "I’m not a scientist," she said. "I can’t figure out if those things were lending credibility to what they’re saying." Peterson said one of the reasons the family didn't ask scientists or regulatory experts about Holmes' claims was because they didn't want "to circumvent things and upset Elizabeth" and risk getting "uninvited" from investing.

The trial, expected to run until mid-December, is now at its halfway point, and it's not clear whether Holmes will testify, or even whether the defense will present a case instead of relying on tough cross-examination of prosecution witnesses, reports the Wall Street Journal. Holmes could face up to 20 years in prison if found guilty, and attorney Richard Greenfield, a specialist in shareholder litigation, says the prosecution has already made a strong case. "What the government has shown is this wasn’t just conning some investors," he tells the Journal. "It was so totally comprehensive." (Last month, a former defense secretary testified that Holmes misled him about a breakthrough that could supposedly save soldiers' lives.)

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